Econ final pt2

a federal budget deficit exists when:

Federal government spending exceeds tax revenues

Foreign exchange rates refer to the: Answer price at which purchases and sales of foreign goods take place. movement of goods and services from one nation to another. price of one nation's currency in terms of a second nation's currency. differ...

... ✓ price of one nation's currency in terms of a second nation's currency.

A trade deficit refers to an excess of: options: 1) imports of goods and services over exports of goods and services. 2) imports of services only over exports of services. 3) imports of good only over exports of goods. 4) exports of goods and services over imports of goods and services.

1

The basic requirement of money is that it be: Question 1 options: 1) Backed by precious metals--gold or silver 2) Some form of debt or credit 3) Generally accepted as a medium of exchange 4) Authorized as legal tender by the central government

3

A recession is defined as

A fall in real GDP that lasts six months or longer

The single most important source of productivity for economic growth for the united states has been: A) improved resource allocation. B) technological advance. C) education and training D) economics of scale

B

. The principal concept behind comparative advantage is that a nation should: A. Maximize its volume of trade with other nations B. Use tariffs and quotas to protect the production of vital products for the nation C. Concentrate production on those products for which it has the lowest domestic opportunity cost D. Strive to be self-sufficient in the production of essential goods and services

C

Which of the following is the basic economic policy function of the Federal Reserve Banks? A. Holding the deposits or reserves of commercial banks B. Acting as fiscal agents for the federal government C. Controlling the supply of money D. The collection or clearing of checks among commercial banks

C

in the simple circular flow model: a) households are sellers of products and demanders of resources. b) businesses are sellers of resources and demander of products. c) households are sellers of resources and demanders of products. d) businesses are sellers of both resources and products

C

Nation X has a comparative advantage in the production of a product compared to Nation Y when: A. It imposes a tariff on the importation of the product B. Its production possibilities curve expands, allowing it to produce more of the product C. It is achieving full employment and is producing the maximum amount of the product D. It has the lower domestic opportunity cost of producing the product

D

The tools of monetary policy for altering the reserves of commercial banks are the a tax rate, transfer payments, and level of government spending. b consumer price index, inflation, and unemployment rate. c public debt, budget surplus, budget deficit, and interest rates. d discount rate, reserve ratio, open market operations, and term auction facility.

D

Which combination of fiscal policy actions would most stimulate an economy in a recession:

Decrease in taxes and increase in government spending

In the expansion phase of a business cycle:

Employment and output increase

One of the basic defenses of economic growth rests on the conclusion that:

Growth makes the gap between unlimited wants and scarce resources less acute.

GDP measured using current prices is called:

Nominal GDP

The principle of comparative advantage indicates that mutually beneficial internation trade can take place only when:

Relative costs of production differ between nation

Which of the following does not explain why specialization increases output?

Specialization promotes self-sufficiency and independence

Fiscal policy is enacted through changes in:

Taxation and government spending

What "backs" the money supply:

The U.S. government's ability to keep the value of money relatively stable

Definition of Gross Domestic Product (GDP)

The market value of final goods and services produced by the economy in one year

At the point where the demand and supply curves intersect:

There is neither a surplus nor a shortage of the product

What function is money serving when you buy a ticket to a movie?

a medium of Exchange

What primary function is money serving when you keep it in a bank account until you need it to purchase a product?

a store of value

investment, as defined in national income accounts, would include:

additions to business inventories

A television report states: "The Federal Reserve will lower the discount rate for the fourth time this year." This report indicates that the Federal Reserve is most likely trying to: Select one: a. reduce inflation b. stimulate the economy c. improve the savings rate d. reduce the credit card interest rates e. save the banking industry

b

An increase in the quantity demanded means that: a. given supply, the price of the product can be expected to decline. b. price has declined and consumers therefore want to purchase more of the product. c. the demand curve has shifted to the right. d. the demand curve has shifted to the left.

b

The federal funds rate is the interest rate that _______ charge(s) _______. Multiple Choice banks; other banks the Fed; commercial banks banks; their best corporate customers banks; on federal student loans

banks; other banks

The MI money supply is composed of

checkable deposits and currency

Balin lost his job due to a recession, and is out of one until the economy recovers

cyclically unemployed

"increase in demand" means that: A. given supply, the price of the product can be expected to decline. B. the demand curve has shifted to the left. C. price has declined and consumers therefore want to purchase more of the product. D. the demand curve has shifted to the right.

d

Crowding out is the notion that:

deficit financing will increase the demand for money, increase the interest rate, and reduce the level of investment spending in the economy

One of the main arguments against further growth for industrialized nations focuses on the problem of

environmental quality

The knowledge and skills that make workers productive are referred to by economists as:

human capital

Gordan James is a person who sells narcotics "on the street" this type of illegal activity:

is excluded from GDP figures

a major argument for economic growth is that it:

leads to a higher standard of living

frictionally unemployed

people who are unemployed for a short time in the transition to an equal or better job

structurally unemployed

people who lose their jobs because of a change in the economy that makes their particular skill obsolete

Show me a pastoral society with an untouched environment, an abundance of leisure, and nonsecular values, and I will show you an underdeveloped, poverty-ridden country." This statement is most likely to be made by a(n):

proponent of economic growth

Which one of the following is a tool of monetary policy for altering the reserves of commercial banks?

reserve ratio

If there is a shortage of product x

the price of the product will rise.

The public debt is the

total of all past deficits minus all past surpluses

When a consumer wants to compare the price of one product with another, money is primarily functioning as a:

unit of account

According to the principle of comparative advantage, worldwide output and consumption levels will he highest when goods are produced in nations where which of the following are true?

✓ A.) opportunity costs are lowest